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Bitcoin’s price drop and Grayscale outflows – Here’s what’s up

2min Read

Grayscale holds more than 566,000 Bitcoins in its custody despite outflows.

Bitcoin: Are rising Grayscale outflows behind BTC's price drop?

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  • Outflows from Grayscale have been more than net inflows into other spot ETFs.
  • The management fees charged by Grayscale were the highest among all ETF issuers.

Bitcoin [BTC] dipped below $41,000 for the first time in six weeks, as the widely anticipated party post spot ETFs approval was turning out to be a damp squib.

The king coin fell to $40,761 at 5 am UTC on the 22nd of January, AMBCrypto noticed using CoinMarketCap’s data. As traders bought the dip, the price was pulled back up to $41,202 at press time.

Source: CoinMarketCap

Grayscale liquidations pull BTC lower

Outflows worth billions in Bitcoins from the Grayscale Bitcoin Trust (GBTC), which has been transitioned to a spot ETF, was the primary bearish catalyst, as AMBCrypto previously reported.

Considering Grayscale still held more than 566,000 Bitcoins in its custody at press time, there were still concerns about prolonged bearish conditions.

Noted Bitcoin analyst Chris J Terry stated that until all the remaining Bitcoin, worth around $25 billion, is liquidated, the king coin’s value would continue to move sideways or fall.

Criticizing Grayscale’s strategies, Terry said,

Grayscale decision to keep ETF fess at 1.5% will go down as the biggest strategic error in crypto history.”

High fees causing disappointment?

Indeed, the management fees charged by Grayscale were the highest among all ETF issuers. Most of the approved ETFs have fees of between 0.2% and 0.4%.

However, Grayscale has defended the high fees it charged. In a recent interview with CNBC, Grayscale Investments CEO Michael Sonnenshein argued,

“Investors are weighing heavily things like liquidity and track record and who the actual issuer is behind the product. Grayscale is a crypto specialist. And it has really paved the way for a lot of these products coming through.”

Rotation to other ETFs to increase?

However, not everyone was buying the narrative that the entirety of GBTC holdings would be sold off.

Notably, Mike Novogratz, the CEO of Galaxy Digital, disagreed with Terry’s arguments. He expressed,

“While I think people will sell GBTC, I think most will switch into other ETFs. This indigestion will end and BTC will be higher in 6 months.”


Read Bitcoin’s [BTC] Price Prediction 2024-25


However, as things stood at press time, the net inflows to other ETFs were less than outflows from GBTC, AMBCrypto spotted using CryptoQuant’s data.

Source: CryptoQuant

It remains to be seen how Bitcoin negotiates the downward pressure in the short to near term. As AMBCrypto reported earlier, billions in capital infusion was expected into the market in the long term.

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Aniket Verma works as a journalist at AMBCrypto. Contrary to most who are primarily interested in merely tracking price movements of cryptos, his focus is on examining the niche intersection between cryptocurrencies and traditional finance. A so-so Bitcoin maximalist, Aniket has a strong disdain for memecoins and the unfounded frenzy they seem to generate every market season. Coming from a strong engineering background, Aniket previously worked as a Content Manager for TV9 Network. Before his stint over there, he was an Associate Multimedia News Producer at Reuters.
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